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“Upstream materials have risen too fiercely.” On the evening of January 6, an insider of Jiangsu Tafel New Energy Technology Co., Ltd. sighed to Times Finance, “This wave of price increases is mainly due to the mismatch between market supply and demand, and downstream demand. If it is too prosperous, the upstream supply is relatively insufficient.”

Since 2021, the new energy vehicle market has ushered in explosive growth, and the price of battery-grade lithium carbonate, the main raw material of new energy vehicle power batteries, has risen even more. It is understood that the price of battery-grade lithium carbonate has increased by about 420% in the past year. For reference, the price of battery-grade lithium carbonate in January last year was 72,000 yuan/ton.

Since the beginning of this year, lithium carbonate has even risen to the “seafood price”, one price per day. According to data released by Shanghai Nonferrous Metals Network on January 6, after the single-day increase of 10,000 yuan/ton on January 5, the price of battery-grade lithium carbonate rose again on January 6, reaching 292,000 yuan/ton to 300,000 yuan. At the price of RMB/ton, the average price of RMB 296,000/ton increased by RMB 8,000 compared with the previous day, and increased by 6.47% compared with the beginning of the year.

In addition, the growth rate of other lithium battery materials in the past year is also very amazing. According to the data of the business society, the prices of lithium hydroxide and magnesium will achieve an annual increase of 317% and 214% respectively in 2021.

It is worth mentioning that under the multiple rounds of lithium material price hikes, the ecology of the new energy industry chain has been tested. An insider in the new energy industry said, “In 2022, the focus of the industry should be on how to sustainably develop the industry chain. If the upstream price increases so much, the downstream will not have the next meal, how can we talk about development?”

Lithium resource price increase, battery factory bears?

“This price increase is mainly due to the mismatch between supply and demand, and the market gap is too large. Now the development of new energy vehicles is too fast, and currently on the market, industrial-grade or brine (lithium carbonate) is used as battery-grade lithium carbonate.” On the evening of January 6, Li Chao (pseudonym), the head of an upstream material supplier, told Times Finance.

It is understood that lithium is known as “industrial monosodium glutamate”. It has been limited to traditional industrial applications for a long time, and the supply and demand are relatively stable. However, in recent years, driven by the electric vehicle industry, the demand for lithium has experienced explosive growth, and its price has also skyrocketed, squeezing the demand of traditional industries.

“(The increase in lithium prices) has lost many old customers, and new (customers) have also added in. Generally speaking, there is no problem with (the company’s development) under this tuyere.” Li Chao said.

“In our industry, if we predict the market, we will stock up more or less. In this big market, we will definitely make money. If we don’t stock up, we may make a small profit. We have a certain amount of stock, but The volume of inbound and outbound is relatively large, and there are not many stocks currently.” Due to the early prediction of the price increase of lithium materials, Li Chao’s company has made some preparations. Regarding the company’s development in 2022, Li Chao said, “This year this year The market is definitely profitable for us, and it’s still pretty good.”

Perhaps because of the status of upstream businessmen, or thanks to the early prediction of the market situation, the material price increase has little impact on Li Chao’s company, but the power battery factories and car companies in the middle and lower reaches are under great pressure.

“In 2021, we basically don’t make money.” On the evening of January 6, an insider of Jiangsu Tafel New Energy Technology Co., Ltd. told Times Finance, “Our battery factory has almost assumed the price of lithium resources in 2021. most of the cost”.

Tianfeng Securities previously released a research report saying that since the price of raw materials is quoted in the market, the actual purchase price of battery companies is lower than the market price, and the improvement of product performance, yield, group rate and other factors of battery companies can hedge against the rising cost of some materials. pressure. It is predicted that the actual cost increase of battery companies is about 20%-25%. Considering that long-term cooperation, bargaining power, purchase volume, account period, etc. will also affect the price of the actual battery purchased by the OEM, and the OEM may form a compensation agreement with the battery manufacturer on the price difference, the battery The increased cost will be passed to the downstream but not all of it will be passed on to the downstream OEMs, and the purchase price of batteries that will eventually be transmitted to the OEMs may actually increase by about 10%-20%.

According to the 2021 semi-annual report, the revenue of battery manufacturer Funeng Technology in the first half of the year was 877 million yuan, a year-on-year increase of 207%, but the net profit attributable to shareholders of listed companies was -226 million yuan, and a loss of 175 million yuan in the same period last year. The growth rate of net profit of battery companies such as Xuan Hi-Tech also cannot keep up with the growth rate of revenue. However, upstream material suppliers such as Ganfeng Lithium and Luoyang Molybdenum are indeed another scene. Among them, Ganfeng Lithium’s net profit growth rate is more than 10 times the revenue growth rate.

“As the price of lithium materials increases, the cost will increase. We predict that the price increase of lithium this year may be similar to that in 2021. From the perspective of the entire industry, whether it is to increase prices or control costs, it is impossible for everyone to be in a state of loss for a long time.” The aforementioned Tafel insider also said, “I believe that under this market, every battery factory will want to increase prices, but whether it can be successful or not depends on comprehensive factors, which depends on the company’s overall cost, customer wishes, etc. “.

According to Times Finance and Economics, under this market situation, power battery manufacturers such as Funeng Technology and Guoxuan Hi-Tech have also made price adjustment plans. An analyst previously told Times Finance, “Under this market situation, electric vehicles will either increase in price or reduce allocation in 2022.” An insider of a mainstream new car company told Times Finance on January 7, “Recently, some of our products also have Price adjustment, but mainly to deal with the subsidy decline.”

2023 may have the opportunity to usher in a market turnaround

“The price of lithium materials will definitely show an upward trend in recent years, and there may be fine-tuning in the middle, but the price will eventually go up and will be very firm.” Li Chao said, “But this is all market behavior, and it is difficult to Human intervention. For us, it is best to maintain the price of lithium carbonate and other materials at a price of more than 100,000 yuan per ton. The customer group will be relatively stable, and we will live more comfortably. The industry is unhealthy, and we certainly want material prices to level off.”

Securities institutions with the same attitude as Li Chao. According to the research report of Zhongtai Securities, the stock market at the end of the year pushed up the price of lithium carbonate and accelerated. In addition, the prosperity of the global new energy industry continues to rise, the electric vehicle markets in China, the United States and Europe are resonating, and the upward trend of upstream raw material prices continues to strengthen. Recently, Sinolink Securities released a lithium expert exchange report saying that the increase in lithium carbonate production is quite limited, but the increase in demand is sufficient, and it is likely to rise to 500,000 / ton.

“There are reasons why the downstream demand far exceeds the current supply, and there are also geopolitical factors. At the same time, the release of water in the US dollar has also pushed up the price of lithium materials.” Regarding the mismatch between supply and demand of lithium materials and the tight supply side, senior industry insiders have analyzed the situation. say. Mo Ke, founder of the True Lithium Research Institute, pointed out that there are more and more speculative behaviors for the purpose of arbitrage in the capital market, it is increasingly difficult for small and medium-sized enterprises to withdraw one after another, and the phenomenon of sellers reluctant to sell and buyers to hoard goods has become the norm this year, and other factors have also intensified. The supply of lithium resources is tight.

Guotai Junan Securities said in a research report that 70% of China’s lithium resources need to be imported. The aforementioned senior person in the lithium battery industry analyzed to Times Finance, “Although the domestic lithium resource reserves are considerable, but limited by the mining technology and cost, the raw materials mainly rely on imports. However, the foreign epidemic is serious, the output of lithium miners is relatively low, and the domestic supply is mainly Depends on domestic output, which is ultimately limited.”

“It may be that in 2022, everyone will be a bit miserable. Next year’s market should have a more obvious improvement, supply will be released, prices will fall, and 2024 and 2025 may be better. However, the shortage phenomenon will still exist, roughly In a dynamic balance, the situation will be better than now.” Different from Li Chao and some institutions’ analysis of the continued bullishness of lithium prices, the aforementioned Tafel insider said, “It will take time for material suppliers to expand, expand, and even release production capacity. The extraction cycle of lithium mine is 5-7 years, and the extraction cycle of one lithium salt is two to three years. According to the current situation, there are lithium mines, and some upstream manufacturers have gradually expanded their production capacity in 2020. It is estimated that in 2023, The supply of resources in the market will be significantly improved.”

It is understood that Ganfeng Lithium, China’s largest producer of lithium compounds and the world’s largest producer of lithium metal, has started to expand production since 2020. In 2021, more than 10 upstream material suppliers, including Tianqi Co., Ltd., Fulin Seiko, Chuanfa Lomon, Bank of China Cashmere Co., Ltd., and Tianyuan Co., Ltd., also issued announcements to accelerate the construction and expansion of lithium carbonate and lithium iron phosphate-related projects.

Sinolink Securities released a lithium expert exchange report saying that many projects on the supply side will be put into production in the second half of 2023 or even at the end of the year, and it will take time to debug after the production line is completed. In 2024 or 2025, the shortage of supply will ease, but it will not be completely reversed. This phenomenon will not happen yet. At best, the severity of the short-term shortage will be weak.

In addition, another industry insider pointed out that even if there is a shortage of supply within two or three years, the resulting price increase will damage the entire industry immeasurably. Mo Ke issued a document saying that the downstream demand is too strong, and the phenomenon of resource bottlenecks may be more prominent in 2022, and the competent authorities will not be willing to see the development results of the domestic new energy industry being harvested by foreign countries. Perhaps at that time, demand will be appropriately curbed, and some policies to curb the overheating development of electric vehicles will be introduced.

“The government has already intervened a lot in order to support the development of the new energy industry. In the current situation, (the government) will not necessarily intervene again, and may be dominated by the market.” The aforementioned Tafel insider said that the current short-term cost is mainly By the battery factory. However, in 2022, the price of batteries will definitely increase, and the leading new energy car companies will definitely increase their prices appropriately. In this case, it will give battery factories a certain space. When the next round of price increases comes, battery factories can support it again. a period of time. In the entire industry chain, the upper, middle and lower reaches have their own responsibility at each stage, and there will be no problem until 2023, and it is impossible to talk about how much impact and damage to the ecology of the industry chain.